Corporate Counsel Daily, Court dismisses class action against Rawlings Co. for lack of jurisdiction, (Sep 18, 2025)

By Brittany DiBiaggio, J.D.

The court dismissed a proposed class action challenging a Medicare Advantage lien, ruling that the claimant must first exhaust the Medicare administrative appeals process.

A federal district court in Ohio found for Rawlings Company (on behalf of Aetna) in a dispute over Medicare Advantage subrogation rights. The court granted Rawlings’ motion to dismiss the claimant’s action, finding that her claims, though pled as unjust enrichment and conversion, arose under the Medicare Act. Because of this, the claimant was required to pursue her appeal through the Department of Health and Human Services before seeking relief in federal court ( Dascenzo v. Rawlings Co. LLC , No. 1:24-cv-1238 (N.D. Ohio Sept. 16, 2025)).

Background. The claimant was struck by a car in December 2023 and obtained a $100,000 settlement from Progressive Insurance. At the time, she was enrolled in a Medicare Advantage plan administered by Aetna. Aetna, through Rawlings Company LLC (“Rawlings”), paid her medical expenses and then asserted a reimbursement lien against her settlement. The claimant challenged Rawlings’ refusal to reduce the lien by her procurement costs, including attorney fees and litigation expenses, and filed a putative class action in state court. Rawlings removed to federal court and sought dismissal due to lack of subject matter jurisdiction.

Motion to Dismiss. Rawlings argued the court lacked jurisdiction because the Medicare Act requires beneficiaries to exhaust administrative remedies before challenging a reimbursement demand. The claimant contended that the exhaustion requirement did not apply because she was only seeking enforcement of a regulation barring recovery of procurement costs.

The court disagreed, explaining that her claims, although framed as state-law unjust enrichment and conversion, depended entirely on federal Medicare provisions and were “inextricably intertwined” with a claim for benefits. It compared the case to Buckner v. Heckler, 804 F.2d 258, 260 (4th Cir. 1986), where a plaintiff’s attempt to recover an overpayment from a Medicare Advantage Organization was treated as a benefits claim subject to exhaustion. Similarly, the claimant’s effort to retain part of her settlement to cover procurement expenses was, “in essence,” a claim for Medicare benefits.

Because the standing and substantive basis of the claimant’s suit arose from federal Medicare regulations, the court concluded that the case arose under the Medicare Act and could not proceed until she completed the administrative appeals process.

Notice and tolling. The claimant further argued Rawlings failed to provide her with proper notice of her appeal rights, waiving the exhaustion requirement. The court rejected this theory, explaining that while Medicare Advantage Organizations must notify enrollees of their appeal rights, a failure to provide notice does not excuse exhaustion, which is an unwaivable prerequisite under the Medicare Act. Instead, inadequate notice may support equitable tolling of deadlines, but that determination must be made by the agency through the administrative appeals process. Accordingly, the court held that the lack of notice did not give it jurisdiction to hear the case.

The court dismissed the case without prejudice, directing the claimant to present her claims through the HHS appeals system. She may refile in federal court only after exhausting the administrative appeals process.

The case is No. 1:24-cv-01238-CEF.

Judge: Fleming, C.

Attorneys: James A. DeRoche (Garson Johnson LLC) for Jean A. Dascenzo. Michael T. Leigh (Kaplan Johnson Abate & Bird LLP) for Rawlings Co. LLC.

Companies: Rawlings Co. LLC

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